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We must return to independent and sensible monetary policies, otherwise we will be back to where we are now in 10 yearsâ€™ time.

The austrian style economists think that the economy will go back to the way it was, and that the root cause was monetary related. I think technology has fundamentally changed the way the economy works, making the old system of private credit growth non-viable.

We can't expand the private credit given to individuals if their wages are going to be falling for the foreseeable future(and their current debts are already overwhelming them). Falling wages, falling profits must mean a massive contraction in private credit, which must mean a severe deflation.

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If it's true that this is basically a direct order from Germany to the ECB (rather than domestic political grandstanding to cover up for the dreadful state of the German economy) it looks like it could be game over for QE in the Eurozone.

Where does that leave the Bank of England's efforts? Presumably closer to the Fed in its outlook, so probably ongoing, and maybe scaled-up, for now?

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direct political instruction from the leader of the eurozoneâ€™s largest member state

to the ECB not to go any further with its own QE programme, and will almost certainly be obeyed.

If the ECB ignored her,

everybody would interpret this as a war on Germany. In that case, you could put the egg timer on the future of European monetary union. It is ironic that Germany of all countries has taught us an object lesson in the limits of Europeâ€™s central bank independence.

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Angela Merkel issued an astonishing attack last night on Labour's flagship policy of printing money to pull Britain out of a recession.

In a remarkable intervention the German Chancellor warned the decision to pump new money into the economy could fuel rather than defuse the economic crisis.

Mrs Merkel's outburst is hugely embarrassing for Chancellor Alistair Darling, who had to sign off on the Bank of England's programme of 'quantitative easing', or producing new money.

Under the plans the Bank will pump Â£125billion into the economy at the rate of around Â£25billion a month by buying up assets such as government bonds using cash it has created electronically.

This gives banks and other financial businesses new funds that they can lend to others to kick-start the economy. But critics fear that unless the money taps are turned off once recovery begins, the programme could lead to soaring inflation.

Mrs Merkel took aim at the Bank of England, along with the European Central Bank and the U.S. Federal Reserve.

Germany is likely to have to foot the bill for a quarter of the ECB's own Â£40billion quantitative easing programme.

She told a conference in Berlin: 'What other central banks have been doing must stop now. I am very sceptical about the extent of the Fed's actions and the way the Bank of England has carved its own little line in Europe.

'Even the European Central Bank has somewhat bowed to international pressure with its purchase of covered bonds.

'We must return to independent and sensible monetary policies, otherwise we will be back to where we are now in ten years' time.'

Her comments came as it was revealed that Gordon Brown's splurge on public services will take Government spending to Soviet levels of almost 50 per cent of national income.

More...Newly minted Bank of England cash is going abroad

A report warns today that the rise is not the result of extra investment to combat the recession. Just 6 per cent of the increase is going on public works, with around a third down to higher costs of welfare and servicing debt.

The rest is the Government's choice to plough more money into schools, hospitals, transport and other public services.

The study, by David Cameron's favourite thinktank, calls for an emergency Budget and an immediate spending freeze.

Eliminating spending increases planned for after April 2010 that are unrelated to the recession would save Â£21.6billion, the centre-Right Policy Exchange claims.

Freezing all Whitehall budgets except social security, tax credits and debt interest at 2008-09 levels would save another Â£87billion.

According to the thinktank's analysis there have been two separate surges in spending under Mr Brown.

The first took spending from 36.3 per cent of GDP in 1999-2000 to 41.3 per cent by 2005-06. In 2008-09, it rose to 43 per cent of GDP and will soar to 48.1 per cent in 2010-11.

The report claims the Chancellor based these figures on rosy assumptions of economic growth after the downturn.

However, the International Monetary Fund predicts that by 2010 the UK economy will be 2.2 per cent smaller than Treasury forecasts, meaning that spending would equal

49.2 per cent of national income - an overall rise of 8.2 per cent in three years.